Bitcoin's Hash Rate Is Rapidly Recovering
The most recent difficulty adjustment to the network raised the mathematical threshold for mining a block by 9.26%, the highest rise since January. This is the third adjustment in a row in which network difficulty has increased, despite a bear market that has caused significant damage to the mining industry.
As per BTC.com, the difficulty of Bitcoin has returned to 30.98 trillion as of Wednesday, up from 28.35 trillion on August 18.
The site contains historical data on Bitcoin’s mining difficulty since the network’s inception, as well as forecasts for the next difficulty change. The latest hike exceeded forecasts of a 7% increase and was just short of being the greatest increase this year.
According to estimates, Bitcoin will see a fourth, more moderate difficulty increase to 31.16 trillion in around 13 days. For reference, Bitcoin’s highest difficulty ever reached 31.25 trillion on May 10th.
The difficulty of Bitcoin is a measure of how computationally challenging it is for Bitcoin miners to mine the next block of Bitcoin. Miners utilize specialized devices known as ASICs to generate hashes quickly enough to create a valid block.
The “hash rate” is the total number of hashes produced across the network per second. The typical Bitcoin block is mined faster than usual when the hash rate increases.
To make up for this, Bitcoin’s mining difficulty changes every 2016 blocks, or roughly every two weeks, to take into account changes in the hash rate and maintain an average block production rate of once every 10 minutes. As a result, the difficulty of mining bitcoin typically follows the hash rate.
Since May, when the Terra fallout and macroeconomic factors drove Bitcoin’s price to its lowest point since late 2020, the hash rate has been volatile. When the price of Bitcoin falls, so does the value of the coins produced by miners.
Since June, the hash rate has fallen from an all-time high of 253 EH/s to just 170 EH/s at the start of August. To meet their expenditures in the meanwhile, miners were obliged to sell large amounts of their Bitcoin assets.
According to Blockchain.com, the trend looks to be reversing slightly, with the hash rate returning to 224 EH/s as of August 29th.Continue Reading